2027 Federal Tax Brackets, Standard Deduction, and Inflation Adjustments: A Practical Guide

2027 Federal Income Tax Brackets and Rates

The federal system remains progressive with seven marginal rates. The rates themselves are unchanged from 2026 to 2027: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. What changes is where each rate begins, as inflation-adjusted thresholds push the income ranges higher.

Single Filers

Married Filing Jointly (MFJ)

Married Filing Separately (MFS)

Head of Household (HOH)

The top marginal rate remains 37% for both single filers and other statuses, but the income thresholds that trigger each bracket are higher in 2027 due to indexing.

2027 Standard Deduction

The standard deduction increases in 2027. It rises to $16,600 for single filers and for those filing separately, and to $33,200 for married couples filing jointly. Heads of households see a deduction of $24,925. The 2027 numbers reflect increases of $500 for singles, $1,000 for MFJ, and a modest rise for heads of households compared with 2026.

In addition to the regular standard deduction, seniors (65 or older) or blind individuals may claim an extra standard deduction of $1,700 per qualifying condition, or $2,100 for a qualifying single filer who is both 65+ and not a surviving spouse. A separate senior deduction under the OBBBA allows an additional $6,000 deduction per qualifying taxpayer, phasing out at 6% for those earning over $75,000 (single) or $150,000 (joint). This senior deduction is not indexed for inflation and expires at the end of 2028.
The personal exemption remains $0 for 2027, continuing TCJA-era elimination, a condition made permanent by the OBBBA.

2027 Alternative Minimum Tax (AMT)

The AMT retains two rates, 26% and 28%, with a higher threshold for the 28% rate. For 2027, the AMT exemption amounts are $93,000 for singles and $144,700 for married couples filing jointly. The 28% rate applies to AMT excess taxable income above $252,500 for all taxpayers ($126,250 for married couples filing separately). Exemption phaseout occurs at 50 cents for every dollar of AMTI exceeding $515,950 for single filers and $1,031,900 for married filers filing jointly.
The OBBBA returned the phaseout thresholds to 2018 levels and accelerated the phaseout rate from 25% to a higher pace.

Note: The 28% AMT rate applies to AMT excess taxable income above the threshold noted above. The OBBBA accelerated the phaseout from 25% previously, increasing exposure to AMT for higher earners relative to prior years.

2027 Earned Income Tax Credit (EITC)

The EITC continues to be a key refundable credit for low- to moderate-income working families. The maximum EITC in 2027 for filers with three or more qualifying children is $8,496. For two or more children, the maximums rise accordingly, with $7,552 for two children, and $4,573 for one child. For filers with no children, the maximum credit is $685.

2027 Child Tax Credit (CTC)

The maximum CTC remains $2,300 per qualifying child in 2027, an increase of $100 from 2026. The refundable portion of the CTC is $1,800 for 2027, up by $100 from 2026.

2027 Capital Gains Tax Rates (Long-Term)

Long-term capital gains have separate tax brackets with 0%, 15%, and 20% rates. The 0% bracket applies to the lowest income levels; the exact thresholds vary by filing status and family size.

2027 Qualified Business Income Deduction (Sec. 199A)

The TCJA originally provided a 20 percent deduction for pass-through businesses, and the OBBBA made it permanent. The deduction begins phasing in for taxpayers with income above $208,300 (single) or $416,600 (MFJ) in 2027. The phase-in range for the deduction was expanded under the OBBBA—from $50,000 to $75,000 for single filers and from $100,000 to $150,000 for married filing jointly.

2027 Estate and Gift Tax

The 2027 gift tax exclusion rises to $20,000 per recipient (up from $19,000 in 2026). The gift to a non-citizen spouse exclusion increases to $201,000. The estate tax exemption is $15,480,000 for 2027. The annual exclusion for gifts also increases to $20,000, with the non-citizen spouse exclusion at $201,000.

Other Inflation-Adjusted Items Worth Knowing

Beyond brackets and the standard deduction, several inflation-adjusted items appear in 2027. These include Section 179 expensing limits, the Adoption Credit, Health Flexible Spending Accounts (Health FSA) limits, Qualified Transportation fringe benefits, Medical Savings Accounts (MSA/HSA interactions), and the Foreign Earned Income Exclusion. The 2027 figures for these items come from IRS indexing and related guidance in Revenue Procedure 2026-35 and related materials.

Other notable adjustments include: the earned income tax credit (EITC) expansion for higher credits with children, a higher monthly limit for qualified transportation fringe benefits, an increased Health Savings Account (HSA) limit of $3,500 for certain contributions and a $700 carryover option for unused amounts, and updated MAGI thresholds for the Lifetime Learning Credit (LLC). The Foreign Earned Income Exclusion rises to $137,300 in 2027. The 179 expensing limit increases to $2,640,000 with a higher SUV cap of $33,100. The Adoption Credit increases to $18,250, with up to $5,280 refundable. The employer-provided childcare tax credit and other related credits are also adjusted under the 2027 parameters.

Other indexing notes include the 0% long-term capital gains bracket thresholds and the 6% phaseouts on certain senior deductions, as described above. For completeness, a dedicated section below highlights how to interpret these items for planning purposes.

How to Use These Tables: A Practical Approach

These tables show the official 2027 figures and how they compare to 2026. They’re a reference to estimate tax liability, plan withholding, and understand how inflation affects your tax position. Remember: brackets apply to taxable income—that is, income after deductions—and only the portion of income within each bracket is taxed at that bracket’s rate.

To determine your tax bracket, identify your filing status, compute taxable income, and find the corresponding row in the relevant table. For example, a single filer with $12,800 of taxable income sits at the edge of the 10% bracket; income above $12,800 moves into the 12% bracket. The same logic applies to MFJ, MFS, and HOH statuses, with their respective thresholds.

Keep in mind: the top marginal rate you see in the table is the rate applied only to the last dollar in the bracket; it is not the rate applied to all of your income. The effective tax rate—the overall percentage of your income paid in federal taxes—depends on the combined effect of all brackets, credits, deductions, and other taxes that apply to you.

How to Know Your Federal Marginal and Effective Tax Rates

Your federal marginal rate is the rate paid on your highest dollar of income. For example, if your income lands in the 24% bracket, your marginal rate is 24%. If your income rises to push you into a higher bracket, your marginal rate increases to that higher percentage for the amount of income that falls into the new bracket.

Your federal effective tax rate is the total tax you owe divided by your total income. Consider a hypothetical 2026 example for context: a married couple with $150,000 of joint income claims the standard deduction of $32,200, resulting in taxable income of $117,800. They owe $15,340 in federal taxes, yielding an effective rate of 10.23%. In 2027 terms, you would calculate similarly but with 2027 brackets and the 2027 standard deduction, then divide the total tax by $150,000 to obtain the 2027 effective rate.

Practical Steps to Save in 2027

Beyond the high-level idea of timing income and deductions, here are targeted strategies that align with 2027 rules. They’re designed to help you maximize benefits within the inflation-adjusted framework:

– Maximize retirement savings: Contributing to workplace plans (e.g., 401(k)) or traditional IRAs reduces current taxable income, potentially keeping you in a lower bracket. Roth options can offer tax-free withdrawals later, subject to age and rule requirements. The 2027 context supports higher contribution opportunities to improve long-term tax outcomes.
– Health Savings Account (HSA): Contributions to an HSA reduce taxable income, which can help stay in a lower bracket, provided you are enrolled in a qualifying high-deductible health plan (HDHP).

– Tax-loss harvesting: For taxable accounts, consider delaying the sale of profitable investments to realize long-term capital gains at favorable rates, and realize losses to offset gains or up to $3,000 of ordinary income per year, with carryforwards for future years. Be mindful of wash-sale rules that disallow a loss if you repurchase a substantially identical investment within 30 days.

– Bunching deductions: If itemizing, concentrate deductions into a year when itemized deductions exceed the standard deduction, potentially enabling a larger deduction in that year. Note that the non-itemizer charitable deduction allows cash donations to charity up to $1,000 for single filers or $2,000 for married filing jointly starting in 2026, and the SALT deduction expansion is part of the broader planning picture.

– Charitable giving: Take advantage of non-itemizer charitable deduction opportunities where eligible, and plan charitable contributions to maximize deduction timing within the 2027 framework.

– Timing income: If possible, delay income into the following year or accelerate deductions into the current year to optimize your tax position.

For tailored planning, consult a tax advisor who can apply these strategies to your precise situation and compare 2026 versus 2027 outcomes using your actual income and deductions.

Frequently Asked Questions

Are the 2027 tax brackets official?

Yes. The IRS released the 2027 inflation adjustments on November 5, 2026, in Revenue Procedure 2026-35. The 2026 figures were set with Revenue Procedure 2025-32. Both sets of brackets on this page reflect the official IRS amounts.

Are the 2027 tax rates changing?

No. The seven marginal rates—10%, 12%, 22%, 24%, 32%, 35%, and 37%—remain unchanged. Only the income thresholds moved with inflation.

Why don’t the brackets rise by the headline inflation rate?

Brackets are indexed to chained CPI (C-CPI-U), which more accurately reflects consumer substitution across goods as prices change. This usually yields a slightly smaller percentage increase than headline CPI, and the IRS applies separate rounding to each figure.

What about 0% capital gains thresholds?

The 0% capital gains bracket exists at precise thresholds by filing status. For 2027, the 0% bracket applies up to $51,050 for singles, $102,100 for MFJ, and $68,350 for HOH, with 15% applying above those thresholds up to the next bracket.

What about the Lifetime Learning Credit (LLC) phaseout and high-earner limitations?

The LLC phaseout and itemized deduction limitations for the top bracket (37%) are part of the broader 2027 indexing context. In practice, readers should consider LLC phaseout ranges and any associated limits when evaluating education-related credits.

Notes and Context

The 2027 adjustments are designed to prevent bracket creep while preserving the overall structure of the tax system. The changes reflect inflation-driven shifts in brackets, the standard deduction, and other inflation-adjusted items, including credits and deductions that affect planning for individuals, families, and business owners.